Taxes for your cleaning business you pay on an annual basis. But taxes for house cleaners can get messy if you don’t track your expenses.
Each cleaning business owner needs to “know your numbers.”
There are other SAAS (Software as a Service) products that can help you like QuickBooks and TurboTax.
Learn to take standard deductions when you pay your house cleaning taxes.
Listen: Taxes for Your Cleaning Business
Watch: Taxes for Your Cleaning Business
Hey there, I’m Angela Brown, and this is Ask a House Cleaner. This is a show where you get to ask a house cleaning question, and I get to help you find an answer. You can find this and 400 other answered questions in this series on our YouTube channel.
Taxes for Your Cleaning Business
Taxes for your cleaning business. Where do you start? Because most house cleaners do not like their taxes.
Here’s a house cleaner who wrote in with a question.
“This is Tanya from South Carolina. I’m wondering, I started my business in June of 2019, so I’m getting ready to file my taxes. But I’m unsure of how to go about it or how I would file, under what category?
I’m having a little trouble understanding it all. If you could just give me some advice on which way to go. Thank you.“
A Lot of House Cleaners Aren’t Willing to Pay Taxes
There are a lot of house cleaners that think that they’re going to get cash and they’re not going to track their money.
They think they’re not going to pay taxes and all those things. The problem is, if that is your business model, it’s very hard to do anything for the rest of your life because there’s no paper trail. There’s no way to get a loan from the bank.
If you pay taxes is the very first thing that a loan officer’s going to ask you when you go to buy a house, when you go to buy a car. They’re going to say, “Can I have two years of your tax records?” This is where it starts. All right?
You Can Hire a Bookkeeper to Help with Taxes
First, you can hire a bookkeeper, which a lot of house cleaners do because they’re not great with numbers.
If you’re a business owner, you have to get great with numbers. It’s not optional. It’s like not learning the cleaning chemicals for different surfaces. You have to learn your numbers. If you want to stay in business, you have to learn your numbers.
So, you can hire an accountant, but now your accountant knows your numbers. You need to know your numbers.
You Have to Know Your Numbers as a Business Owner
You have to know your numbers as a business owner. There are several different software platforms on the market. And now we live in an era of technology, so everybody has smartphones, everybody has tablets, laptops, computers, whatever it is.
There are many different ways that you can track your numbers from the software. QuickBooks is a good program. There’s FreshBooks and there’s Quicken.
It’s so important to start keeping track of your costs of goods. This is all your cleaning supplies, the gloves that you wear, if you have Swiffer dusters, those are going to be your cost of goods. All your cleaning detergents, your brushes, your brooms, your mops, your vacuums, all that stuff.
Take in Account Operating Costs for Taxes
Your operating expenses are going to be a little bit different. Those are going to be your internet access and your smartphone, which you have to have to run a business.
The software that you can us is software as a service, known as a SaaS (software as a service), which is something you pay for every month.
QuickBooks, for example, has an online portal where you sign up with QuickBooks. Then it links to your bank account information.
Use Software to Keep Track of All Business Purchases
So, every time you buy cleaning supplies, it logs into your system on Schedule C. This goes on your taxes, that, hey, you bought cleaning supplies. When you fill your car up with gas, it goes in on a specific line item and says, you put fuel in your vehicle for your business.
When you pay your smartphone bill, it goes on a very specific line. It’s going to transfer over into your taxes. So if you have the software that tracks your spending and it tracks all the money you have coming in. It starts offsetting those costs.
Here’s how much money you earned, here’s how much money you spent to make the business happen. Whether it’s payroll or it’s fuel for your vehicle, there are programs on the market that will help you track all your expenses.
Using Turbotax for Your Taxes
Now that you have all your expenses tracked, there’s a program called TurboTax. You’ve probably heard of it as it’s been around forever. It’s an amazing program for small businesses.
Even if you decide to hire an accountant, it is a good idea to have your own version of TurboTax. Here’s the reason why: When you set up TurboTax, it’s going to ask you what business you are in. And you’re going to say, “I’m a house cleaner.” And it’s going to give you a number, which is an ID. This is the number or the ID for house cleaning.
Then it’s going to say, “In house cleaning, these are standard deductions. Did you do any advertising this year, did you have the internet? Did you have a smartphone, did you buy cleaning supplies?” And it goes through all the different questions of the standard deductions the house cleaners take.
Only Take Standard Tax Deductions
The reason this is important is that you only want to take the standard deductions. The Disney trip you took with your family, is not a standard deduction. Most house cleaners do not take the Disney cruise. And so, you can’t tax deduct that, because that’s not standard.
And if you try to, it will throw up a red flag and will say, “Whoa, this is not a standard deduction, and you might get audited. Do you still want to take this deduction?” And then you’re like, “Ooh, I don’t want to be audited.” So then you remove it.
So before you even go to your bookkeeper, and you’re paying your bookkeeper by the hour. You can resolve a lot of those issues before you ever go to your bookkeeper.
Start with Tax Software First
So, where do you start? Start with QuickBooks or FreshBooks or whatever the software is that you choose. Do your research. They’re all pretty good, and they all pretty much do the same thing.
TurboTax has different versions of TurboTax based on how big your business is. If you’re an LLC, if you have employees if you have independent contractors, and that as well.
Start Today with Your House Cleaning Taxes
Start keeping track of your numbers. Because you can’t survive in business for the long haul if you don’t know what the critical numbers of your business are. So, check it out. The important thing is that you start.
Start tracking it today, and then when it comes tax time if you want to hire an accountant. Then you will have everything already and you’re not spending 400 hours of their time. You’re giving them the file, and they’re going to double-check it.
And within an hour or two, they’ll say, “Yeah, you’re good to go.” But the TurboTax will pretty much do all the same stuff anyway. There’s a lot of stuff you can do yourself. You need to know your own numbers. Resources
J.K. Lasser’s Small Business Taxes 2020: Your Complete Guide to a Better Bottom Line – https://amzn.to/3aAxxK8
Taxes for Small Business: Beginners Guide to the Tax Process for Small Businesses – https://amzn.to/2w3avNd
475 Tax Deductions for Businesses and Self-Employed Individuals: An A-to-Z Guide to Hundreds of Tax Write-Offs – https://amzn.to/3dOs98z
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